Shawano Leader (WI): Minimum wage hike goes into effect today

By Leader staff
Shawano Leader (WI), July 24, 2009

The nation’s lowest-paid workers will get a raise today when the federal minimum wage climbs 10.7 percent to $7.25 an hour.

“It’s about time,” said Cliff Thompson of Shawano, who works at a local fast food restaurant. “The previous amount we were getting paid was a joke.”

With the economy mired in recession, the boost couldn’t come at a better time for the workers who will benefit.

Thompson will be one of an estimated 196,000 Wisconsin workers who will benefit when the wage hike takes effect, said Laura Dresser, a labor economist with UW-Madison’s Center on Wisconsin Strategy. That includes 100,000 people who make less than $7.25 an hour and 96,000 who make more than that but are likely to gain indirectly from a positive ripple effect.

For a full-time worker going from the current federal minimum wage of $6.55 to the new level, the raise will mean an extra $28 a week.

Friday’s wage hike represents the last installment of a three-part increase instituted the past two years.

“It’s a good stimulus policy because low-wage workers are the ones who spend their money and don’t save it when they get a wage increase,” Dresser said. “They have to buy stuff — food and shelter and all those immediate things that go directly into the economy.”

Marty Olsen, executive director at Employment Options, an employment agency that works with many manufacturers in the area, said all but one of her clients, which is a non-profit, start people at $9 an hour.

“It’s long overdue, but as far as this area and the manufacturers around here, we don’t think it will make a significant difference at this time,” Olsen said.

Debbie Mielke, a milk producer in the town of Grant, said the farm help wage increase from $5.15 to $7.25 will not effect their industry much either.

“If you want good reliable help you would pay a good rate, and I don’t know of farms paying much less than $8 around here. Lead milkers can make up to around $12 per hour,” she said.

Mielke said it could still be a tough year, especially with low milk prices.

“There is no cheap labor out there, but I don’t know if I could make it on $10 an hour even,” Mielke said. “Talking with my vet, he said this may just be another year where the employees are making more than the owners.”

Still, the increase a tough sell to employers of minimum wage workers — from hotels to daycares to burger chains — who find themselves having to cut larger paychecks as their revenues continue to shrink.

Imposing a pay increase during a recession is particularly bad timing and could lead to layoffs, benefit cuts or lower take-home pay for business owners, said John Metcalf, director of human resources policy for Wisconsin Manufacturers and Commerce, the state’s largest business organization.

“We have to compensate one way or another,” said Mark Klister, who owns Shawano Sports Park. “It has come from either gross income or controlling some other costs because we will feel it. There are several places that are paying minimum wage to the younger people and everyone is going to feel it.”

Minimum wage advocates counter the wage bump will keep more working poor afloat, and say more increases are needed to help stimulate consumer spending and strengthen businesses in the long run.

It’s an old policy debate that resurfaced when Congress passed the increase two years ago and has taken on urgency as the nation’s fiscal funk has deepened.

In the end, it’s the workers and their employers who find themselves caught in the middle.

Steve Sengstock, director of Shawano County Economic Progress Inc., said he expects business owners are in one of three camps on the change.

“There are going to be some that are grumpy because it forces them to look somewhere else to kind of make up for what kind of impact that has on their payroll and they’ll be other businesses that will shrug it off, saying that’s part of the cost of doing business.”

Sengstock said some businesses that are able have built into their budget projections cost of living increases to cover such government-mandated changes.

The third camp, he said, are retail and tourism businesses that are upset because it costs them that much more to hire for simple tasks.

A national group called Business for a Fair Minimum Wage issued a news release this week saying it supports the increase because it will boost consumer buying power and promote economic recovery.

The organization indicated the change will bring a pay increase to more than 7 percent of Wisconsin workers.

A further wage increase could eventually become a reality: One of President Barack Obama’s campaign promises included raising the minimum wage to $9.50 an hour by 2011.

Copyright 2009 Shawano Leader

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